Internal Tesla salary database shows Elon Musk’s strategy: Lower salaries, bigger stock grants

Tesla attracts millions of job seekers annually. The few who receive offers typically face a calculated gamble: Accept lower base pay up front for the chance of a potentially lucrative future payout.

Business Insider secured access to an internal Tesla pay database, covering nearly 100,000 employees as of December 2021. That data, along with public filings and interviews with people who have worked for the automaker, reveal the company’s pay strategy. Tesla offers lower base salaries than its tech and automotive peers but offers substantial stock grants.

Even Tesla’s top earners must bet on the company. This high-risk, high-reward system is coupled with a selective hiring process that has in the past included Elon Musk’s sign-off for every hire.

Using Tesla’s internal salary database, BI looked at median base pay for the roughly 13,000 full-time, salaried, US-based employees across the internal job categories that Tesla uses to define workers in business units, such as engineering, manufacturing, or data management. (BI excluded pay for hourly workers, many of whom work in manufacturing, as it was not possible to accurately calculate their median annual pay based on hourly payroll data.)

BI further broke down the data to look at median base pay by job title, analyzing the numbers for full-time, US-based, salaried roles with at least five employees.

The base pay for these titles, which include directors of engineering and managers who work in Tesla’s service centers fixing vehicles, ranges from about $35,000 to $324,000, according to the data.

Nine current and former workers told BI the pay structure has largely remained in place since December 2021 and is ultimately part of Musk’s quest to hire only the most “hardcore” workers.

“The whole system is set up to find the fanatics,” a current Tesla worker with knowledge of the company’s hiring process said. “They could get better pay somewhere else, but we want the people who are die-hard Tesla.”

A former Tesla recruiter who worked with the company until 2024 said the automaker’s interview process for engineers — which typically entails at least nine interviews and can take months — and the company’s pay structure are designed to weed out workers who are looking to just “clock in and clock out.”

“It’s a culture thing,” the former recruiter said. “It’s not even about how smart you are or how much you know. They’re looking for a willingness to learn and put in the extra hours.”

Tesla, Musk, and the company’s board of directors did not respond to requests for comment.

In a December 2023 regulatory filing, Tesla reported it employed more than 140,000 people worldwide. In April, Tesla told staff it planned to cut more than 10% of its workforce. A June estimate from CNBC placed Tesla’s headcount at just over 120,000.

Using separate data from the Securities and Exchange Commission, BI compared the company’s median base pay with that of traditional automakers and the six largest tech firms by market cap. Tesla lags behind all of them except Amazon. While there are a variety of factors that can affect a company’s median salary — for example, Amazon’s large warehouse workforce or Apple’s large retail workforce — the data is consistent with what four current and former Tesla employees say: Tesla’s base salaries are generally less than competitors’.

Nvidia, Ford, Meta, and Amazon declined to comment on their employee compensation packages. Apple, Microsoft, and Alphabet did not respond to a request for comment. GM said it has doubled its staff in Silicon Valley over the past six months and is competitive in hiring talent away from tech firms.

Nine current and former people in engineering and sales said that Tesla’s stock grants make it easier to accept lower base salaries. Tesla stock could make them rich, if only on paper. On November 8, the automaker’s stock surged more 8% in the wake of Donald Trump’s re-election, hitting a market cap of $1 trillion.

Some Tesla employees can receive millions of dollars in stock. In 2020 and 2021, 44 US-based employees were offered stock worth more than $1 million, according to the database.

To get a sense of which employees were more likely to take home large grants, BI broke up stock grants based on job category. The data show that most workers in engineering received stock grants above $25,000. The value of the stock is based on the value of the shares at the time they were granted, but it’s subject to change based on Tesla’s share price.

Of the stock offerings at Tesla, about 75% were restricted stock units, or RSUs, while nonqualified stock options made up 21%, and were given exclusively as merit-based compensation, according to BI’s analysis of US-based, full-time workers. Only 4% of employees — including many executives and other high-level workers — received the stock as incentive stock options, or ISOs.

Zaheer Mohiuddin, the cofounder of Levels.fyi, said RSUs are very common in tech, while incentive stock options are typically reserved for longtime high-level employees or nonpublic companies. RSUs are typically included in standard compensation packages, while nonqualified stock options and ISOs are often used as additional incentives.

RSUs give employees actual shares that vest over time, while ISOs simply provide the right to purchase stock at a preset price before expiration — which is potentially profitable if the stock price rises above that level, but also requires the employee to have money on hand to pay for the stock in the first place.

Outside of one person within Tesla’s executive job category who had no stock amount listed, Tesla executives received stock offerings worth between $950,000 and $20 million, according to the database, which displayed the latest stock amount for each employee as of December 2021. All but one of the executives’ offerings were ISOs.

Tesla is far from the first company to enhance base pay with stock grants. Companies like Meta, Google, and Amazon have been known to offer employees healthy stock grants. Employee survey data from 2024 from the compensation-benchmarking company Levels.fyi found that Tesla’s median base pay and stock grants for US-based software engineers are slightly lower than that of US-based software engineers at Meta, Amazon, Apple, Netflix, and Alphabet, collectively.

Over the past five years, Tesla’s stock has spiked well over 1,000%; that performance potentially makes those grants attractive.

Greg Selker, a managing director at the executive recruitment firm Stanton Chase, told BI that while other Big Tech companies might have higher base pay and equity grants to match, Tesla’s strength also lies in its image.

“There’s a mission-driven element to it that allows Tesla to get away with paying less,” Selker said. “These people are working to bring about the decarbonization of the planet.”

Musk has previously described what the stock options can do for employees. “We give everyone stock options; we’ve made many people who are just working the line — who didn’t even know what stocks were — we’ve made them millionaires,” he said last year.

BI examined the median stock grants and the percentage of employees who received grants for each job category and found that a majority of workers in nearly every category received some type of stock grant.

Tesla’s pay strategy has more in common with other Silicon Valley companies like Google or Meta than it does with traditional automakers, Harley Shaiken, an auto industry and labor expert, told BI. Traditional automakers like GM or Ford rely on higher base pay while companies like Tesla, which has seen higher stock returns over the past five years, can attract talent through stock grants, Shaiken said.

“Tech workers are looking for the opportunity for a big payday, not just an incremental salary bump,” he said.

One former sales manager said Tesla’s stock offerings initially attracted him to the role, but he compared them to “golden handcuffs.”

“The stock is the major hook. You might be unhappy in your role, but you just decide, ‘I’m going to keep my head down and wait a few months longer until I vest,'” he said.

Tesla’s stock offerings have given some workers opportunities for major paydays. Drew Baglino, Tesla’s former senior vice president of powertrain and energy engineering, and Zachary Kirkhorn, the former CFO, were awarded $20 million each.

Other executives, including Musk’s right-hand man Omead Afshar, received $10 million in stock offerings, according to the database.

“It’s part of the benefit of taking a chance on a company like Tesla,” one engineer who joined the company in 2015 told BI. “You might have to deal with the aches and pains of a startup — the long hours, some of the uncertainty — but there can also be a significant payoff.”

Aaron Greenspan, a vocal critic of Musk and the founder of PlainSite, an organization that provides access to legal documents and advocates for legal transparency, first referenced Afshar’s stock grant in a lawsuit filed against defendants including Musk and Tesla, accusing them of defamation, among other claims. Lawyers for Musk and Tesla have called his claims “largely unintelligible allegations.” The lawsuit is ongoing.

Tesla awards stock grants with promotions and annual reviews and bases them on the company’s performance, according to the salary database and conversations with four current employees. Last year, the company cut back on merit-based stock awards for staff, Bloomberg reported and the four employees told BI. In June, Musk told staff he planned to award additional stock grants for “exceptional performance.” During annual performance reviews in July, managers were limited to recommending no more than 20% of their team to be considered for the extra award, two people with knowledge said. Tesla typically awards employees restricted stock units that vest over a period of four years, the data show.

Selker said historically Tesla workers have been able to count on their stock continuing to grow.

“It’s a bet they have to make,” he said. So far, stock grants have “proven to be better than cash in your pocket.”

“Now, if the stock were to become inconsistent or halve, then Tesla will have to change its strategy,” he added.

Tesla’s stock has experienced significant volatility this year, slumping as low as 44% in mid-April from its price at the start of the year. Following Donald Trump’s re-election, it’s up nearly 30% overall year to date.

At least one longtime Tesla staffer worries about new hires.

“I feel lucky that I got in early, but I see a lot of younger engineers expecting to reap the same benefits,” they said. “And I’m not sure they will.”

Do you work for Tesla or have a tip? Reach out to the reporter via a non-work email and device at gkay@businessinsider.com or 248-894-6012.